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By Cheryl Bolen
Jan. 15 -- Howard Shelanski, the new administrator of the Office of Information and Regulatory Affairs, is contemplating changes in 2014 to strengthen agencies' retrospective review of rules and to provide more transparency about the status of rules under review by OIRA.
Shelanski outlined these changes and his agenda for the coming year during a Jan. 13 interview with Bloomberg BNA at his office in the Eisenhower Executive Office Building, overlooking the White House.
OIRA is an agency within the Office of Management and Budget that reviews draft regulations from executive branch agencies under Executive Order 12,866. In January 2011, President Barack Obama set a new standard for regulatory review through EO 13,563.
OIRA's agenda this year will largely be driven by what comes in through the agencies, Shelanski said. And so, its priorities in terms of actually doing regulatory review are going to reflect the kinds of rules that the agencies put forward, he said. Those rules, in turn, will reflect the priorities of cabinet secretaries and the president, Shelanski said.
Some of the rules coming down the pike are well known, including rules related to the president's climate agenda, and transportation safety, he said.
“On the regulatory review side, our agenda is going to be careful review, but I also think efficient processing of the rules that come into us from the agencies,” Shelanski said.
Other priorities for OIRA are continuing the work it does on international regulatory cooperation, such as regulatory cooperation with Canada and Mexico and the ongoing Trans-Atlantic Trade and Investment Partnership negotiations.
Regulatory cooperation with Canada has been successful and is moving forward in various areas, Shelanski said. OIRA will continue to remain engaged in high-level regulatory cooperation with Mexico, which has been an ongoing process, Shelanski said.
Where OIRA wants to take the policy lead is in retrospective review, Shelanski said.
“It's certainly going to be an area of priority for me and for OIRA over the next, I'd say, several months to a year, to try to come up with some more concrete ways to deepen and strengthen retrospective review,” he said.
In his 2011 executive order, Obama directed executive branch agencies to look back at all of their pending and existing regulations to find any that could be modified, streamlined or even eliminated if they were not working as intended. Agencies now must file reports to OIRA semiannually on their plans to look back at their regulations, known as retrospective review plans.
“We are working closely with the agencies to make sure that the reports they file twice a year are taken seriously, that they're comprehensive and that they're timely,” he said.
Agencies published their retrospective review plans reports over the summer on their websites. Soon, OIRA will have another report from the agencies reflecting their retrospective review plans, Shelanski said.
“More than just keeping that process going, we're working on several things to try to strengthen and further institutionalize the retrospective review process so that over time it will be a good mechanism through which agencies can remove and reduce unnecessary regulation,” Shelanski said.
“But just as importantly, a process through which they will make changes to fix or improve regulations that might still be warranted, but in light of experience, might need some adjustment or change,” he said.
Shelanski said the mechanism for doing this was still under discussion and needed to be discussed carefully with the agencies. Shelanski and the agencies are still working on what it is that will work, given the reality of agencies' structures, cultures and resource constraints, he said.
Sally Katzen, a former OIRA administrator in the Clinton administration and now a senior adviser at Podesta Group Inc., said that when it comes to retrospective review the low-hanging fruit has been plucked by every administration at least since Reagan. “And most of that low-hanging fruit has already been harvested," she said.
There are some regulations that could be updated to take advantage of new technology, for example monitoring electronically rather than recording and reporting by hand, but she called this burden reduction at the margins.
In terms of tackling some of the issues, whether it be in voting rights or environmental rights or worker safety, the agencies have a lot on their plates and they're going to want to move forward, not look backwards, she said.
Susan Dudley, a former OIRA administrator in the Bush administration and now a public policy and public administration professor at George Washington University, said she has not seen retrospective review have a big impact. “I think there's very little to show for it,” she said.
The president's executive orders have all said this is a new way of regulating and not a one time event. “So, I think it could be very significant and important,” Dudley said, though she added that she has not seen any evidence that it is yet.
For example, Dudley said, new regulations that are coming out don't have plans for how they will do retrospective review, and they need to. For this to work, every time an agency issues a regulation, it has to predict what the regulation is going to do and also how the agency is going to measure whether its predictions were right, she said.
“What I'll be watching for in 2014 is when new, big regulations come out, is there a plan for exactly what we're going to do to measure whether our predicted effects are actually happening,” she said.
Reducing the backlog of regulations under review is a priority for Shelanski, though he said he prefers to use the term “extended review” rather than “backlog.”
There is a normative time to review regulations of 90 days or 120 days with an extension in the executive order, Shelanski said. But this is not a legal deadline, and according to Shelanski, no single time period can fit all rules.
There are rules that can be reviewed in a week and rules that are incredibly complicated, Shelanski said. “My priority at OIRA is first and foremost to make sure that review is done in a careful and rigorous way, and upholds the standards of the executive orders,” he said.
Shelanski wants the analyses that accompany the rules to be well done and justified. Also important, is meeting the president's objective and guiding principle of making sure regulation is commonsense and understandable and ensuring the nation's regulatory program remains consistent with growing the economy and creating jobs, he said.
“These are all part of the analysis and the review that to me, are the most important thing, to get that review right. But we also want to get it right in as timely a way as possible, given all the constraints,” he said.
Shelanski also sought to give credit to the staff of OIRA and his deputy, Dominic Mancini, who served as acting administrator for a time and initiated the process of getting the agency back on a normative schedule.
Shelanski said he has tried to push these efforts in additional ways but is not satisfied with the progress the agency has made to date. OIRA is going to continue to push to find ways to get back on a regular schedule, Shelanski said, adding that it is good for the agencies as well as stakeholder groups to have more certainty what is coming out and when it's coming out.
“More importantly, the new rules that come in are really getting done in a timely fashion,” Shelanski said.
Amit Narang, regulatory policy advocate at Congress Watch -- Public Citizen, said Shelanski and his team deserve a lot of credit for reducing the backlog of rules.
“It's been encouraging to see that thus far, and we're hoping and expecting to have the office continue in that vein,” he said.
OIRA has many rules it will be reviewing this year and throughout the rest of the president's second term, Narang said, and it is essential that the agency is able to operate effectively and efficiently.
When asked about an expected increase in regulatory activity by agencies this year, especially in the area of climate change, Shelanski said the total number of rules on the agenda is actually down.
“Let me push back a little bit on the notion that there is some kind of big regulatory surge coming,” he said.
He acknowledged that OIRA has done a lot of big rules in the past year--rules he described as beneficial and which have a lot of consensus around them. He also confirmed that there are additional rules coming, including some large environmental rules that are on the unified regulatory agenda.
“I don't know that I would say that 2014 represents some kind of anomaly in the flow of rules,” he said, noting that OIRA is ready for the rules that are headed its way.
Katzen, however, predicted there will be more regulatory activity this year.
“There will be an increase in regulatory activity in 2014, in part because they have been working through the delays in the process over the last few years and in part because the president and his advisors seem to be somewhat more comfortable using executive action to achieve their objectives,” she said.
John Podesta's arrival at the White House this month is the best evidence that there will be more regulatory activity, particularly in the area of the environment, Katzen said.
Climate change is high on the president's agenda, Katzen said. And with no action on this issue expected from Congress, it will have to happen through executive action. If Podesta wasn't confident that there was a green light for environmental regulation, he wouldn't be going into the administration, Katzen said.
Dudley said she has seen a slowdown in regulatory activity since 2010.
There was a slowdown after the election and then an expectation that it would pick up again, Dudley said. While there has been a pickup in regulatory activity, it is unclear what is coming, she said.
Looking at the unified agenda, there are some big rules that are expected, but that are not on the list, like the ambient air quality standards for ozone that were pulled in 2010, Dudley said. Those rules have to be done on a five-year cycle. While the Environmental Protection Agency was ready to go back in 2010, these rules were not on the unified agenda, Dudley said.
Instead, these rules were listed as a long-term action on the agenda, with no date, though it appears that there will definitely be a proposal in March, she said.
Several water regulations from EPA also are expected as well as more climate-related proposals, she said.
Other big individual regulations include energy efficiency standards from the Department of Energy and a rear-view mirror rule at the Department of Transportation that has been kicking around for a long time, Dudley said.
“And then of course health care and financial rules, we're bound to see a lot of those coming out,” she said.
On domestic regulation, there is going to be an increase in both regulatory activity by the agencies and the pace of clearances at OIRA, compared to 2012 and 2013, a former senior administration official said. Now, with a confirmed administrator, a permanent deputy administrator, a confirmed OMB director and the new leadership at the various agencies, there will be a return to more regular order.
“No regulatory tsunami, because there never was one, but certainly more activity, more clearances, and shorter review times at OIRA than over the past two years,” the official said.
Looking at the last decade, there is a fairly consistent range of rulemaking activity, the official said. Interestingly, in some ways 2012 and 2013 were outliers on the down side, the official said.
In terms of big rules, the EPA air rules are probably the biggest, most ambitious and consequential rulemakings of the president's second term, the official said. He also expects important energy efficiency rules also out of DOE, as well as an increase in activity by the Department of Labor, including the Occupational Safety and Health Administration and the Mine Safety and Health Administration, which now have strong leadership.
Turning to Capitol Hill, where several regulatory reform measures have been introduced and some have passed through committee, Shelanski said he doesn't believe that any legislative changes to the rulemaking process are necessary.
“I think we have the tools and the capabilities that we need to do our work,” he said. The skills of the staff, existing administrative law and executive orders provide OIRA with what it needs, Shelanski said. This is the reason the administration has not supported any of these legislative efforts to date, he added.
Shelanski said he would much rather use the tools and legal frameworks that already exist, than risk real unintended consequences or unhelpful intended consequences from some of the pending bills.
Katzen said there may be a bill or two that Republicans will view as particularly tough for Democrats who are up for reelection, and if that's the case, those may come to the head of the queue. “But the expectation is, with 2014 being an election year, there will likely not be any significant legislation in the regulatory arena,” she said.
Narang similarly expects little progress on regulatory reform legislation in this Congress.
There may be slightly more legislative activity in 2014 than 2013, solely because it's an election year with rhetoric picking pick up ahead of the midterm elections as candidates hit the campaign trail, Narang said. But in terms of actual, substantive legislation passing in this area, Narang sees legislation having no better chance than in the past.
In December, the Administrative Conference of the United States (ACUS), an independent agency, adopted a statement of principles recommending ways to improve the timeliness, transparency and effectiveness of the OIRA review process (236 DER A-15, 12/9/13).
Shelanski said he read the ACUS report and commended the agency for its dedication to getting the administrative process and regulatory process to be the best it can be. In terms of what ACUS recommends, much is consistent with what OIRA is doing already, Shelanski said. For example, it recommends that the OIRA administrator should prioritize reducing times for review.
Making review as efficient as possible is already a high priority, Shelanski said.
Another ACUS recommendation is to circulate draft rules when they come in, Shelanski said, adding that OIRA already has an interagency review process.
ACUS also recommended that agencies and OIRA coordinate prior to submission of a rule. But Shelanski said OIRA needs be “very careful” in this area.
“It is not OIRA's job ever to dictate the policy choices and the policy priorities of the agency.” he said. “It is not my job as administrator to tell a secretary or somebody in one of the departments, you should change your policy or you should be focusing on a different policy.”
Shelanski said it is OIRA's job to review rules and implement policies. “What we are talking about is making sure that the kinds of things OIRA is going to be looking for are present: has there been a good regulatory impact analysis, have alternatives been considered, has a flexibility analysis been done so that the effects on small businesses are specifically looked at,” he said.
It also is important to make sure that the unique ways in which a rule may affect small businesses have been thought about and that flexibility and alternatives have been considered, Shelanski said.
But Shelanski acknowledged that there are benefits to coordination. The agencies benefits because they don't get surprised by requests after they've submitted the rule and OIRA benefits because the high-quality submissions it receives are easier to review, he said.
ACUS also suggested greater resources for OIRA, but Shelanski said OIRA is hardly unique in this regard. The whole of OMB was significantly hampered by the sequester, Shelanski said.
OIRA is simply a reflection of the broader OMB resource issue. “Obviously we at OMB are grateful for any additional resources that we get and those resources would be put to extremely good use for the American public, there would be real payoff to any resources we get,” he said.
More resources at OIRA means reduced review times and maintained high-quality review. However, OIRA has no special claim over the rest of OMB, he said.
ACUS also raised the issue of additional public information about the status of rules, especially if they have been held over for a long time.
When a rule comes into OIRA, Shelanski said it is his general view that the agency should be as transparent as possible about what is happening. And one of the reasons to push for keeping review times as short as possible, consistent with a high-quality review, is that it shortens any period during which people may feel they don't know what is going on.
Shelanski said it is important to put the OIRA process in the context of the broader administrative process, adding that these are all rules that go through, by and large, the Administrative Procedure Act process of notice and comment, he said.
“There is a tremendous amount of public participation in the rulemaking process; an ability to review and examine what is in the text of rules during that proposed phase,” he said.
At the end of every review process, it is possible to have a red-line that shows the rule that came in versus the rule that came out, Shelanski said. But if every change in the red-line had to be labeled to note whether it came from OIRA or the agency, regulatory review would be become complicated and unworkable, Shelanski said.
Review actually happens in a lot of small steps, with a lot of deliberation and discussion between staff at OIRA and staff at agencies. There is a lot of back and forth questioning that leads to a lot of small, iterative changes. And often it is not always clear where a suggestion comes from, because they emerge from discussion, he said.
“So while transparency is a very easy thing to articulate in principle, what you would actually want to share when is unclear,” Shelanski said. The amount of information and number of releases would be unworkable, he said.
Narang said he would like to see Shelanski pursue some institutional changes when it comes to transparency, such as public notice when OIRA requests that an agency make substantive changes to their rules.
OIRA also should be transparent about why a particular rule that is being reviewed has exceeded the 90-day timeline in the executive order, especially in cases of unusual or lengthy delays, Narang said. This should include some kind of explanation to the public of why the delay is occurring and when the public can expect to see the rule released by OIRA, he said.
Often an agency is asked to go back and look at new information that might not exist, Shelanski said. They want the ability to come back and not have to air every step in the process, not because they don't want the criticism, but because some of these steps are false roots or dead ends, he said.
“Now, all of that said, I would like there to be a way for people to understand at sort of a big level here's what's going on, the rule is back at the agency for the following reasons,” he said.
Shelanski said he is in discussions with a number of people about ways OIRA might improve the transparency why a rule is under extended review.
Still, it is not always a discrete and simple explanation. Often the explanation is simply that there are a lot of discussions ongoing and the agency is taking its time running down a lot of data and there is a lot of difficult analysis to review, Shelanski said.
“And that's not a very satisfying thing, because people tend to see regulation in very simple terms: prevent X, mandate Y, repeal Z. But it's very rarely that simple, because there are many alternatives, there are many unintended consequences, and what we do here at OIRA is to look at what the reality will be underneath those big bold headlines, and that's not always the simplest and easiest thing to do or to communicate,” he said.
Obama has outlined his regulatory priorities, which are well known and include a climate action plan, Shelanski said. OIRA's mandate from the president is to make sure that the key policy priorities get executed, consistently with common sense and economic growth.
“My mandate is to work with the agencies to implement those policy priorities, and of course to implement the required and desired policies of the agencies that are consistent with the president's priorities,” he said.
This includes ensuring regulation is sensible, understandable, achieves its intended goals and that the benefits to Americans are substantial and justify the costs, he said.
With Congress being deadlocked, the remainder of the administration's major policy accomplishments will have to come from the regulatory system and the administrative side, Narang said.
Narang said it is important for the president to fulfill the commitments he made in terms of public protections to have the administration ensuring a regulatory system that is efficient and effective. But this would require a change in direction, Narang said.
Narang said this could be a strong and better articulated progressive narrative supporting not only the need for regulations but the need for a streamlined and effective regulatory system that puts protecting the public first.
Some senators are frustrated with delays at OIRA and point to major pieces of legislation that tare not being implemented fast enough to respond to the threats they were addressing in the legislation, Narang said. Other pieces of legislation are not being implemented at all, he said.
Philip Wallach, a fellow in the Governance Studies program at the Brookings Institution, said 2014 is likely to be one of the biggest years for regulation in history, and pointed to EPA's plan to release a proposed rule for greenhouse gas emissions out of existing power plants this summer.
“That rule proposal will be among the most contentious regulatory proposals in the nation's history, for sure,” he said.
Wallach said there is a pretty strong chance that Republicans will step up some of their regulatory reform efforts and try to highlight those as part of their 2014 campaign themes.
Candidate Matt Bevin, who is challenging Sen. Mitch McConnell (R-Ky.) in the primary contest in Kentucky, has made support for the REINS Act one of the themes of his campaign, he said.
The Regulations from the Executive In Need of Scrutiny (REINS) Act (H.R. 367), which has passed in the House, would require an up-or-down vote in both chambers of Congress before any major rule could take effect.
“I can imagine forming some kind of bipartisan coalition for something that would require Congress to give more input into some of the biggest regulatory efforts coming out of the executive branch,” he said.
The REINS Act might not be their clearest path to legislation, at least barring a 2014 recapturing of the Senate by Republicans, Wallach said. But Obama has sent some clear signals that he's willing to think about the issues of regulatory burdens, he said.
Wallach said he expects there to be continuing litigation in 2014 and fighting over the regulations that come out of EPA. He pointed to Utility Air Regulatory Group v. EPA that's slated for oral arguments before the U.S. Supreme Court in February on some of those regulations .
Environmental rules continue to be a major bone of contention going forward, where many business interests and Republican lawmakers see the executive branch as overextending its powers. In response, they are looking for every way they can to fight back against those moves, Wallach said.
If Obama is serious about making EPA's greenhouse regulations a priority and getting them in place during his second term, he must move sooner rather than later, Wallach said. “Whenever that rule does drop it's going to be a real battle royal, the likes of which we haven't seen on any regulation in a while,” he said.
And even if the administration does make it a real priority, Wallach said he is skeptical that they can get rules in place in the next couple of years due to the contentious nature of these issues.
The former senior administration official said experience has shown that it is extremely difficult to pass any type of regulatory reform legislation. There are a number of bills in Congress, some wide-ranging in scope, some narrowly tailored, none of which have a better than 50-50 chance of passing and surviving a presidential veto, he said.
“I do think there will be efforts on the Hill to reenergize some of these, and I do think there are a few areas in which there's a greater possibility of what I'll call consensus, centrist, reasonable regulatory reform--real improvements to the regulatory process,” the official said. These areas include nonbinding review of independent agency major rulemaking, permitting reform and use of science and risk assessment in rulemaking.
Permitting reform was a major feature of the president's Jobs and Competitiveness Council and the administration has done quite a bit in terms of enacting the council's administrative recommendations, the official said. But the areas for which there are real gains to be made that haven't been fulfilled are in the legislative arena, he said.
There also will continue to be rulemaking activity that responds to unforeseen events or new developments, the official said.
Rail safety and pipeline safety are going to be issues that are going to receive a lot of attention because of the need to transport larger and larger quantities of oil and natural gas by rail and by pipeline, the official said. Regulators are going to have to keep pace with this expansion and any risks that come along with it, he said.
Those are the kinds of regulatory activities that develop unexpectedly, they may not have been on people's radar screens a year or two ago, and they kind of crop up as the world changes or that incidents occur, he said.
“And so you really don't know in the next year or two what the new issues are going to be,” he said.
To contact the reporter on this story: Cheryl Bolen in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Heather Rothman at email@example.com
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